More Attention Should Be Paid to Making the U.S. Less Vulnerable to Foreign Oil Price and Supply Decisions

Gao ID: EMD-78-24 January 3, 1978

In response to a congressional request, the relationship between oil companies and the Organization of Petroleum Exporting Countries (OPEC) was reviewed.

Control of oil supplies and prices lies mainly with the governments of OPEC rather than with private oil companies. The companies seek to protect access to crude oil supplies by entering into long-term agreements with producing countries. These agreements help to stabilize the sales of individual OPEC countries, counteracting tendencies toward disunity. Strengths possessed by the United States which can influence oil supply and prices are: the United States is the home country of five of the seven multinational major oil companies; the U.S. market for foreign oil represents about 20% of OPEC exports; the United States is a leader in technology and management; it offers opportunities for capital investments; it is in a leading position for loans, aid, and security; its market is important to the export sales of other countries; and it is a leader in international political relationships. Links should be established between these strengths and U.S. international energy policy. The policy of keeping hands off company negotiations is not justified because of political implications. Government guidance and oversight in these negotiations would allow for the inclusion of public interest considerations.


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